Do you know these IRA facts?

Did you know:

P.S. The deadline for putting money into IRAs for this year is April 15, 2022. This includes both Roth and Traditional IRAs. If you didn’t max out your 2021 IRA contributions, now’s your chance. (Consult your personal advisor or attorney for advice specific to your unique circumstances before taking action.)

*To be eligible for this program, you must meet the IRS eligibility requirements for contributing to an IRA. Restrictions may apply. Certain state residency required. Your spouse/domestic partner, parents, parents-in-law, and children and their spouses may also participate in our IRA program if they live in one of the approved states.

Exciting new feature in yourMONEY Snapshot mobile app

For those of you who utilize the yourMONEY Snapshot mobile app, we have some great news!

If your school district allows online salary reduction agreement changes in your 403(b) account, you can now change your deferral through the mobile app. We’re very pleased to be able to offer this convenient option to our members.

The yourMONEY Snapshot app lets you toggle between goal forecasting, balances, transactions, investment performance, quarterly statements, and more.

Learn more about the yourMONEY Snapshot.

Mutual fund changes

We want to thank everyone we serve through our vision of “every member financially secure” who is saving for retirement with a 403(b) or IRA from WEA Member Benefits. We value you and we’re looking forward to our next 50 years of serving you (learn more at our 50th anniversary celebration page).

Participants utilizing these funds received a letter in January 2022 with details and important dates to note regarding two mutual fund changes that will be taking place in our 403(b) and IRA programs. Here is a summary of the information participants in our retirement programs received.

Vanguard Institutional Target Retirement Funds

Vanguard is merging the Institutional share class with the Investor share class for all Vanguard Target Retirement Funds. This is good news for members as it’s expected to result in a lower expense ratio of 0.08% for each target retirement fund following the completion of the mergers. The merger is scheduled to take place on or about February 9–16 and will result in a blackout period of up to seven business days. Other important dates regarding these funds can be found in the letter.

T. Rowe Price Mid-Cap Growth

Member Benefits will also be replacing the T. Rowe Price Mid-Cap Growth fund with the ClearBridge Select Fund IS in the WEA Tax Sheltered Annuity 403(b) and WEA Member Benefits IRA programs.

Beginning March 2, 2022, contributions, distributions, and trades will be held for processing until after the mutual fund change is complete during the week of March 7. Other important dates regarding these funds can be found in the letter.

What you can do

These changes will happen automatically—no action is required on your part. You may download a prospectus and fact sheet or call and request a prospectus and fact sheet to be mailed to you. We are advising participants to read the prospectus carefully and consider the fund’s investment objectives, risk, and charges and expenses before investing. The prospectus contains this and other information about the investment company.

This may be a good time to review your portfolio to take advantage of the choices available. Member Benefits offers financial planning services that also include nonretirement personal investment accounts.

Time to review 403(b) and IRA contribution limits

The contribution limit for the 403(b) has increased from last year to $20,500 in 2022. The limit on annual contributions to an IRA stays the same at $6,000. If you’re not maximizing your contributions, you may wish to re-evaluate the amount you’re putting toward retirement. Not only do you lower your taxable income, you ensure that you’re doing everything you can to reach your retirement goals.

If maxing out contributions is not realistic for you right now, remember: With compound interest, even a small amount invested today can grow to a large sum by retirement.

Elective 403(b) Contribution Limits

Calendar yearSalary Reduction Contribution Limit15 Years of Service Catch-UpAge 50 and Over Catch-UpPossible maximum
2022$20,500$3,000$6,500$30,000
2021$19,500$3,000$6,500$29,000

IRA (Roth and Traditional) Contribution Limits

Calendar yearUnder age 50Age 50 or older
2022$6,000$7,000
2021$6,000$7,000

NOTE: Because the maximum Roth IRA contribution may be reduced depending on MAGI (Modified Adjusted Gross Income), some high-income taxpayers may not be able to make Roth IRA contributions; however, they could make Traditional IRA contributions.

A recipe for retirement

We wish it were easier, but in reality a lot goes into planning for retirement. It’s like hosting a holiday meal—you need to plan for how many people are coming, what you’ll serve, the ingredients you need, and the timing of the food. You know that some preparation and organization are going to be necessary to make the meal a successful one.

Much like coordinating a holiday meal needs a recipe for success, so does retirement planning. The recipe isn’t the same for all, but there are several common ingredients that most everyone should include as they create their plan.

Here are some of the ingredients for creating a delicious retirement.

Prep early

The earlier you start saving, the more you can take advantage of compound interest. Compounding is what happens when earnings on your investments are reinvested in your account. The reinvested earnings may also have earnings and then those earnings are reinvested and so on. Compounding can have an amazing impact on your retirement savings.

However, it’s never too late to start saving. Saving even a small amount each month is better than nothing. But the sooner you can, the better.

Dish up your savings options

If you’re not saving in your district’s 403(b) program, you may want to get started. Your savings receive advantageous tax treatment, and your district may kick in more through a match.

Member Benefits’ IRA program is also a great savings option. It gives you the opportunity to save for retirement outside of employer-sponsored retirement plans.

Blend in this fact: More spending in the future requires additional savings today.

You need personal savings to help fill any shortfall in your retirement income that may not be satisfied by your Wisconsin Retirement System (WRS) pension plan and Social Security benefit. As life expectancy increases, saving more is becoming increasingly important. According to the Centers for Disease Control and Prevention, the average life expectancy for a person who was 65 years old in 2018 is 85.7 years for women and 83.1 years for men—and life expectancy for both genders continues to increase. And as of 2021, one out of three 65-year-olds today will live past 90, according to the Social Security Administration.

Put your personal retirement contributions on autopilot through payroll deduction or monthly automatic withdrawals from a checking or savings account to make it easier to save. Your options with the 403(b) and IRA may differ, so check with your specific plan.

And don’t forget to increase your savings contributions on a regular basis. We have more information on annual contribution limits.

Measure up your savings goals

What do you want to do in retirement—travel, shop, golf, start a hobby? Do you plan to purchase a home or help your kids out financially? More spending in the future requires additional saving today. Be realistic about the price tags of the things you want to do knowing that the cost of living will continue to increase and that you may live longer than you expect.

Member Benefits has an array of free financial calculators that can help you as you clarify your retirement goals.

Mull over fees

You wouldn’t willingly overpay for food, so take the same approach with your retirement account. Costs matter, and you need to understand all of the fees involved. Our fees are simple—a Member Benefits IRA or 403(b) has one low annual administrative fee with an annual fee cap. (Mutual fund management and redemption fees apply.)

To make the most of your invested dollar, you want to minimize the fees you pay. Ask questions of the retirement savings providers you’re interested in—they should be able to provide a clear and complete explanation of their program fees. Learn more about fees.

Proceed carefully

As the school year gets in gear, you may see more financial representatives in your building. Be wary of those who sell high-cost financial products that have additional layers of fees (sometimes hidden) for things like insurance, wrap accounts, etc. Sometimes brokers and insurance agents can benefit more from product sales than the client.

Because seniors are a growing segment of investors, financial services firms are increasingly focusing their marketing and sales of investment products on investors in or nearing retirement. One common marketing approach is to invite seniors to an investment seminar and offer them a free meal. Be on the lookout for exaggerated claims or guarantees that are often part of the enticement. If it sounds too good to be true, it probably is.

If you really want to go to one, do your homework before the seminar and don’t rush your decision—let it percolate a while. A good investment will be available tomorrow or next week or next month…when you are ready and when you understand exactly where your money is going. Ask plenty of questions so you know what you’re buying as well as the risks and costs.

And don’t let anyone tell you that you need to move your 403(b) or IRA with WEA Member Benefits somewhere else when you retire. You do not have to move your 403(b) or IRA account when you retire or change jobs…even if you change careers. We will still be here to serve you. You can stick with us up to and through retirement.

Let your retirement savings rest

Have you ever pulled out a roast from the oven and were so hungry you cut into it right away? Chances are it was probably drier or tougher than you expected because you didn’t give it a little time to rest first. Patience is a virtue in cooking as well as saving for retirement. Withdrawing early from your retirement savings can be tempting at times, but it should always be your very last resort. If you pull funds out early, you’ll lose principal and interest, and you may lose tax benefits or have to pay withdrawal penalties. You can borrow money for things while you’re working, but you can’t borrow money for retirement.

Avoid the pressure cooker: A good investment will be available tomorrow or next week or next month.

Cook up a plan for the unexpected

When preparing a holiday meal, sometimes the unexpected happens…like you thought the turkey would be thawed in time, or a relative invites “just a few friends” to join in at the last minute.

Preparation and flexibility are keys for coping with those situations as well as for retirement planning. Health care costs are a major consideration that many people underestimate. Fidelity’s 20th annual Retiree Health Care Cost Estimate reveals that a 65-year-old couple retiring this year can expect to spend $300,000 in health care and medical expenses throughout retirement. For single retirees, the 2021 estimate is $157,000 for women and $143,000 for men. And the COVID-19 pandemic has prompted many to accelerate their retirement plans, which means paying for health care insurance until qualified for Medicare.

Inflation and the uncertain future of Social Security are other factors to consider. That makes it all the more important to make personal savings part of your retirement plan.

If you find you’re more limited in what you can afford to do in retirement than you expected, you may need to be more flexible. It could be you need to delay retirement for a while, move to a smaller place or cheaper locale, or work a part-time job.

Fold in a flexible mindset when it comes to your plans and expectations for retirement.

This may also help you postpone claiming Social Security or cover expenses during a market downturn. Weigh out all the opportunities available to you. Staying active by working or volunteering can also be a great way to pursue an interest or gain a new one, meet new people, and remain socially connected and challenged.

Mix in a financial advisor

According to the Department of Labor, only 40% of Americans have calculated how much they need to save for retirement. That’s likely because it’s just not always easy. One of the most challenging aspects of creating a solid retirement plan is striking a balance between realistic return expectations and a desired standard of living.

The financial advisors at Member Benefits can help you anticipate your future tax liability, get a real picture of your assets and challenges, and help you make necessary changes now before you retire. For Wisconsin public school employees, it’s important to work with someone who has a thorough understanding of 403(b) savings accounts and WRS, such as the financial advisors at Member Benefits.

Sometimes a little help goes a long way. If you’re looking for guidance on whether your portfolio aligns with your current goals, or if you want to explore your tolerance for risk, decide on investment objectives, determine your retirement expenses and income, or discover whether you’re on track for retirement, we have a service for you.

Visit our financial planning page to learn more about our financial planning service options, or email weafa@weabenefits.com to get started.

Stay informed

No matter what your age, be sure to do your research and educate yourself using reliable resources. Member Benefits is an excellent place for retirement information. Visit our learning center to access articles, eBooks, calculators, informational brochures, an interactive budget worksheet, and more. And feel free to call us with your retirement questions at 1-800-279-4030.

Your recipe for retirement is personal and unique, just like Grandma’s special apple pie. If you pick up some tried and true ingredients and follow the recipe directions, you can accomplish your goals and create a satisfying retirement.


Your retirement recipe


Considering a financial advisor?

Ask questions first. Learn more about how to begin your financial advisor search.

Understanding your 403(b)

What is a 403(b) plan?

A 403(b) plan, also known as a tax-sheltered annuity (TSA) plan, is a retirement plan for certain employees of public schools and certain other 501(c)(3) tax-exempt organizations. It allows employees to contribute some of their salary to the plan, and the employer may also contribute to the plan for employees. As of 2018, 403(b) plans covered around one in five U.S. employees who have around a trillion dollars of savings.

How it works

A 403(b) can be a great way to save for retirement. It is similar to the private sector’s 401(k). A salary reduction agreement (SRA) must be completed to start payroll contributions into your 403(b) account.

Your district may offer an employer match. In other words, the district matches your contributions. For example, it could be fifty cents on the dollar up to a certain level, a flat amount, or many other types of options.

Whatever kind of match your district offers, if you’re not putting money into your 403(b) and there’s a match, then you may be leaving money on the table.

Contribution limits

The most an employee can contribute to a 403(b) account out of their salary in 2021 is $19,500. Those age 50 or over at the end of the calendar year can also make catch-up contributions of $6,500 beyond the basic limit on elective deferrals. If permitted by the 403(b) plan, an employee who has at least 15 years of service with the same eligible 403(b) employer may be able to contribute an additional $3,000. Learn more about contribution limits.

Roth option

Some districts offer a Roth 403(b) option. Roth contributions are after-tax, which means you pay taxes now on your contributions, but all qualified* withdrawals, including earnings, are tax free.

This is different from 403(b) contributions that are made on a before-tax basis. Before-tax contributions reduce your taxable income and defer taxes until you withdraw the money.

One of the greatest benefits of Roth savings is the ability to reduce your tax liability in retirement.

For decades, the assumption has been that most people would be in a lower tax bracket in retirement and thus would benefit from before-tax savings. However, changes in tax policy, including lower tax rates, the taxation of Social Security, and other deductions available under the tax code increase the chances that you could be in the same or higher tax bracket when you retire.

These changes mean that before-tax savings alone may not be the optimal tax strategy in every situation.

So the question is, do you want to pay the taxes on your contributions now or when you retire?

Exchanges, transfers, rollovers

You can move funds from another retirement plan into a WEA Tax Sheltered Annuity Trust 403(b) account, but the way these are handled is based on the type of retirement plan you have and your school district plan documents.

An exchange, if allowed by your school district plan, is when you move 403(b) funds from one district vendor to a second district approved vendor while employed by the same school district.

A transfer, if allowed by both your current and former school district plan, is when you move your 403(b) funds from a previous employer’s plan to your current employer’s plan.

A rollover is when you move funds from a different type of retirement account, such as an IRA, 401(k), or 457(b), to your current employer 403(b) plan. Check with us to see if rollovers are allowed into your employer’s plan.

It is also important to remember that a Roth 403(b) can only receive funds from another Roth 403(b) or Roth 401(k).

We can help you. Talk with a Member Benefits representative to discuss all the rules and procedures and to get your questions answered.

The importance of saving

As a Wisconsin public school employee, you have the Wisconsin Retirement System (WRS) and Social Security for retirement. But the two alone are not enough. On average, Social Security payments make up only about 14%–28% of retirement income for those who receive WRS. To build a secure retirement, you need three things: WRS, Social Security, and your personal savings, such as the 403(b).

Learn more about Member Benefits 403(b) program or enroll today.

1-800-279-4030
weabenefits.com/403b
weabenefits.com/enroll

*For qualified withdrawals from the Roth 403(b), the participant must be age 59½ or older and have had the account for at least five years.
Sources: IRS, Forbes

National Retirement Security Month

According to the 2021 EBRI/Greenwald Retirement Confidence Survey, over 7 in 10 workers are at least somewhat confident in having enough for a comfortable retirement, including 3 in 10 who are very confident.

Yet on average, people have $98,800 saved for retirement. At the same time, people’s expectations for how much they’ll need to retire comfortably is $950,800 (Northwestern Mutual Planning & Progress Study 2021). Nearly half (45%) of Americans say the pandemic has impacted their timeline for achieving long-term financial security, with most saying it’s a setback of one to two years.

And despite many having rather lofty retirement income expectations, only four in 10 workers have attempted to calculate how much they will need to have saved to meet those expectations. Most workers ages 40 and up are not saving nearly enough to generate sufficient retirement income to meet their retirement expectations, with one in four having no savings at all (Retirement Readiness Among Older Workers 2021, Insured Retirement Institute).

What gives?

Not only are Americans seemingly unprepared for retirement, most don’t even know it. Social Security’s future is uncertain, private sector pension plans are disappearing, life spans are increasing, COVID has affected many people’s finances, and health care costs are rising. Working longer and living on less will be a harsh reality for many.

The good news

As a public school employee, your employer contributes to the Wisconsin Retirement System on your behalf, covering a portion of your retirement needs. But that’s not all.

As a public school employee, you are eligible to open a 403(b) retirement savings account. A 403(b) is a great opportunity to build additional savings with before- and/or after-tax contributions conveniently deducted from your paycheck. A 403(b) can help you achieve your retirement dreams, regardless of your age.

Early career

Start today. The longer your time horizon before retirement, the longer your money can work for you. You can start a 403(b) with as little as $20 per pay period. When selecting a provider, compare fees. Even one percentage point can make a big difference in your account balance at retirement.

Mid-career

Take time to calculate your retirement income needs. Our retirement planning calculators can help you approximate how much you need to save, determine the impact of changing your retirement savings payroll deductions, ascertain projected shortfall or surplus at retirement, and more.

Work toward contributing the maximum allowed. Include after-tax (Roth) contributions, if available in your district, to your 403(b) account to help reduce your tax liability in retirement. Please check with your employer for the availability of after-tax contributions.

Member Benefits’ 403(b) program

Most public school employees in Wisconsin have access to Member Benefits’ 403(b)—a program recognized nationally by Forbes and the LA Times for its sound management and low fees. Call one of our consultants at 1-800-279-4030 for more information.

Are multiple retirement accounts costing you money?

According to the financial tech company, Capitalize, by the end of 2021 there will be an estimated 25 million “forgotten” 401(k) accounts in the U.S., with an average account balance of approximately $55,000 and representing nearly $1.35 trillion of assets in total. In aggregate, these forgotten 401(k) accounts could be costing retirement savers a whopping $116 billion annually from higher fees and lower investment returns.

Often 401(k)s are left behind by people who have changed jobs or terminated their employment. People today change jobs more often—on average, 12 times over their careers. That could mean dealing with 12 different 401(k)s and/or 403(b)s over time, putting a person in a potentially very costly situation.

Steps are being taken to protect savers’ assets. Auto portability is a fairly new 401(k) plan default feature that automatically transfers small-balance retirement savings when participants change jobs. Bipartisan legislation to create a national lost-and-found database to help plan participants keep track of their retirement accounts has been introduced once again, and could end up being part of a larger SECURE Act 2.0 retirement reform package that may come out late this year. Lawmakers are also looking at ways to solve the problem of 401(k) “leakage,” which is when participants cash out their account instead of rolling it over to a new retirement savings account.

If you want to consolidate and aren’t sure where your old 401(k) is, there are three places it may be: In the old account set up by your employer; in a new account set up by the 401(k) plan administrator; or in your state’s unclaimed property division.

Do you or your partner/spouse have multiple accounts from old jobs? Did you have a retirement savings provider change at work and now have a second account? Consider rolling over to a WEA Member Benefits IRA account. It could save you money because of our low annual administrative fees and annual fee caps. And our IRA is open to your spouse/domestic partner, parents, parents-in-law, and children and their spouses, even in some states outside of Wisconsin.

Contact us for more information at 1-800-279-4030, Extension 8577 or visit weabenefits.com/rollover.

Restrictions may apply. Certain state residency required.

Simplify your life with account consolidation

Here are three reasons you may want to consolidate your retirement accounts.

Economic advantage

Consolidation may save you money by eliminating or reducing fees. Fees eat into your bottom line, which is even more crucial once you retire. Member Benefits retirement programs offer low fees that are capped annually, which keep costs in check (mutual funds fees still apply). Ask for a complete list of fees that may apply to each of your accounts, including mortality and expense fees, surrender charges, and custodial fees. Member Benefits does not charge these fees. Visit our Fees Matter page for more information.

Comfort

As you approach retirement, you need to consider reducing your risk as you have more to lose and less time to make up for market losses before you need the money. If you have more than one account, you may have different portfolios with differing levels of risk, and you’ll need to keep track of all of them.

Feeling comfortable with the level of risk you take when investing is key. Revisit your asset mix periodically to make sure your tolerance for risk matches how you’re investing your money. Having one account makes managing your risk easier to do.

Simplicity

A common reason people consolidate is convenience. Some or all of these might appeal to you.

Less work, more clarity. Managing multiple accounts can be a lot of work. If you have five different accounts, you receive five different quarterly statements. Each one reports the quarter’s activities differently, so it’s no small feat to get a glimpse of your overall situation. Putting your assets in one place, such as with Member Benefits, gives you a clearer snapshot of where you are financially.

Consolidation also makes tracking contributions and withdrawals easier. Because there are limits to how much you can contribute to most retirement accounts—penalties will apply if you go over—multiple accounts require you to more closely monitor where and how much you contribute.

Headache-free RMDs. The Internal Revenue Service (IRS) requires you to start withdrawing required minimum distributions (RMDs) from certain types of accounts, such as a 403(b) and Traditional IRA, generally at age 72 (or 70½ if you turned 70½ before January 1, 2020). When calculating your RMD, you must consider all of your accounts. Although you have some control from where and how you want your RMD to be taken, you are also responsible for communicating your withdrawal plans to all of your account providers. Failing to make your intentions clear can go bad—if an account owner fails to withdraw an RMD, fails to withdraw the full amount, or fails to withdraw by the applicable deadline, the amount not withdrawn is taxed at 50% (IRS).

One point of contact. Questions about your statement or asset allocations can get answered with one phone call or by logging in to one account. And tasks such as updating an address or changing a beneficiary are made simple.

Remember, you can stick with us—we’re here for you up to and through retirement. Take care when moving money so you can avoid common and costly mistakes such as surrender charges and other deferred sales charges. We can help talk you through what to consider. Call us about consolidating your accounts at 1-800-279-4030.

Still want to make an IRA contribution for 2020?

The Internal Revenue Service recently announced that individuals have until May 17, 2021 to meet certain deadlines that would normally fall on April 15, such as making Individual Retirement Account (IRA) contributions. This includes both Roth and Traditional IRAs. Roth contributions are after-tax, which means you pay taxes now on your contributions, but all qualified* withdrawals, including earnings, are tax-free. Traditional IRA contributions may be tax deductible and the earnings are tax-deferred while accumulating in the account; however, contributions and earnings are taxable when distributed.

So if you didn’t max out your 2020 IRA contributions, now’s your chance.** (Learn more about contribution limits.)

An IRA is a great way to save for your future by increasing your retirement savings and taking advantage of tax benefits. Member Benefits offers low administrative fees and a fee cap. There are no fees to open or close an account. If you meet eligibility guidelines and live in one of the states that offer our IRA program, you and your family can participate. Find out if your state is eligible.

For more information about saving with an WEA Member Benefits IRA, visit our IRA page or call us at 1-800-279-4030.
 

*For qualified withdrawals from the Roth IRA, the participant must be age 59½ or older and have held the Roth IRA account for at least five tax years.

**Consult your personal advisor or attorney for advice specific to your unique circumstances before taking action.